November 1991 Home   Newsletters

December 1991

January 1992

President's Message (Arlene Ellis)
Public Administration Program - UH Manoa
Leasehold Committee
City Council Gives Planning a Beating
Central Oahu
Golf Courses
Ewa Marina
Local 5 Vote Count
Home Rule Committee
Plan of Complete Liquidation and Dissolution
Membership
Letter from Neil Abercrombie on HR 2707 (Neil Abercrombie)

Leasehold Committee

Mr. Mike Sklarz, Researcher with Locations Inc., was the guest speaker on November 20th. Dr. Sklarz, relating to leasehold problems, stated that the market will determine the outcome. Leasehold values will be driven down. More stringent leasehold disclosure regulations will mitigate some of the current problems such as the surrender clauses.

On the question of prohibiting further leasehold development by law, he wondered whether there would be a constitutional question. Here again, he felt that the market would be a determining factor. He related that one should not be involved in long range residential contracts because inflation and other factors are hard to account for.

Reflecting on small land owners, he said that they are bad business; many are unsophisticated and emotional. It would be ideal for these owners to sell and get out. Rent caps are a way to handle lease rent renegotiations, but Sklarz favored shared appreciation, where lease rents are set to a reasonable rate and the lessor participates in the equity profits at the sale of property. At this juncture, leases could be extended and surrender clauses eliminated as part of the negotiations.

On the question of an anti-speculation tax, he felt that there are problems, such as, what is meant by speculation, criteria for speculation--time held and so on. He has just completed a quantitative study of condo-lease conversion and found that only 10 to 15% of sales are speculative sales. or held and sold for 18 months or under. He contended that the statement, "If residential leasehold is stopped, no one will be able to afforded a home" is a "red herring".

On December 3rd, Phyllis Zerbe was the guest speaker. Ms Zerbe stated that she is one of the small landowners who own residential multi-family (condominium and cooperative) leasehold property in Hawaii. She stressed that the vast majority of these multi-family lessors own land under only one project and that they are not large estates or corporations. They are local families, churches and charities. They are totally against mandatory conversion which they describe as deliberate aggression and an invasion of private property. They believe that voluntary conversion is the way to go.

Any problem arising can be settled through the provision of arbitration in the contracts that are mandated by law. She stated that the State should step in to help those who are truly needy. They are concerned with skyrocketing resale after conversion. And that consumer index has nothing to do with land values. She went on to state that the lease rent cap and mandatory conversion will not increase the number of available housing. She contended that lessees have taken advantage of cheap land leases to pay for their children's education, taking trips and so on. She declared that their concerns included the following: they will lose land which has been in their families for generations, that small land owners who are retired or disabled will be burdened by losing their means of support, and that they will be forced into expensive litigation. She felt that leasehold developments should be continued with some kind of ideal lease. And that shared appreciation is great if they can be negotiated.

MR. OZ STENDER, BISHOP ESTATE TRUSTEE AND MR. RICHARD PORT, A STAUNCH SUPPORTER OF LESSEES, WILL BE THE SPEAKERS FOR THE ANNUAL MEETING SET FOR SATURDAY, DECEMBER 14, 1991.

November 1991 Home   Newsletters January 1992